According to the Association of British insurers, 212,000 fraudulent insurance applications were uncovered in 2014, which averages out at approximately 4,000 per week. The fraudulent activities ranged from lying on applications about unspent convictions to “fronting” policies for their kids. There were also warnings issued regarding ghost broking scams, a form of fraud in itself, and a warning that insurance prices which have been creeping up again over the past few months will face increases again in the coming months.
Car insurance prices had been reducing over the past year or so, following a promise by insurers to lower their prices. However, the AA has reported that the past several months have seen premium prices increasing gradually once again, and while critics will argue that this shouldn’t be happening, insurers will point to the number of fraudulent applications as being one reason why prices must increase.
Another reason for the increase is the rise in insurance tax being levied by the government. The AA has estimated that this increase in tax will equate to a rise of an average of £18 to a typical car owner and on comprehensive policies. This is due to the tax charged to insurance companies increasing from 6% to 9.5% in November and insurers have already warned that this will lead to an increase in prices for customers.
There were a number of fraudulent methods reported. Some of these techniques include giving false information, such as providing a false postcode for an address with lower insurance costs, failing to give details of penalties and endorsements on a licence, and the act of drivers “fronting” policies for their kids – putting themselves down as the main driver, even though the car is driven primarily by their son or daughter.
The ABI also warned drivers about the practice of “ghost broking” where fraudulent brokers sell non-existent policies to drivers. This means that the driver is then unwittingly driving around without insurance, which can lead to penalty points, a hefty fine, and even to disqualification in some cases. It is possible to check the askmid website to determine whether your car is currently and legally insured or not.
